Shadow Banking

16 Pages Posted: 13 Jan 2014  

Zoltan Pozsar

Federal Reserve Banks - Federal Reserve Bank of New York

Tobias Adrian

International Monetary Fund

Adam B. Ashcraft

Federal Reserve Bank of New York

Hayley Boesky

Federal Reserve Bank of New York

Multiple version iconThere are 3 versions of this paper

Date Written: December 1, 2013

Abstract

The rapid growth of the market-based financial system since the mid-1980s has changed the nature of financial intermediation. Within the system, “shadow banks” have served a critical role, especially in the run-up to the recent financial crisis. Shadow banks are financial intermediaries that conduct maturity, credit, and liquidity transformation without explicit access to central bank liquidity or public sector credit guarantees. This article documents the institutional features of shadow banks, discusses the banks’ economic roles, and analyzes their relation to the traditional banking system. The authors argue that an understanding of the “plumbing” of the shadow banking system is an important underpinning for any study of financial system interlinkages. They observe that while many current and future reform efforts are focused on remediating the excesses of the recent credit bubble, increased capital and liquidity standards for depository institutions and insurance companies are likely to heighten the returns to shadow banking activity. Thus, shadow banking is expected to be a significant part of the financial system, although very likely in a different form, for the foreseeable future.

Keywords: credit intermediation, financial institutions

JEL Classification: G01, G21, G23, G24, G25

Suggested Citation

Pozsar, Zoltan and Adrian, Tobias and Ashcraft, Adam B. and Boesky, Hayley, Shadow Banking (December 1, 2013). Economic Policy Review, Vol. 19, No. 2, 2013. Available at SSRN: https://ssrn.com/abstract=2378449

Zoltan Pozsar

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Tobias Adrian (Contact Author)

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

HOME PAGE: http://www.tobiasadrian.com

Adam B. Ashcraft

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045-0001
United States
212-720-1617 (Phone)
212-720-8363 (Fax)

Hayley Boesky

Federal Reserve Bank of New York ( email )

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